How to create a culture that leverages design – in the right way – for business impact

By Katie Schlott

Every company is fundamentally built on innovation. In the beginning, each sets out to address a challenge that only their business model or experience can solve. But as most companies mature, the need to drive revenue and generate bottom line results encourages a focus on optimization and scale, over exploring new ways to deliver value, and prototyping businesses for future growth.

This tension between optimization and innovation plagues CEOs and innovation leaders, in every industry, on every continent, with Boards mandating quarterly results and innovation leadership in the same breath.

“Mature corporations are bad at innovation by design. All the pressures and processes that drive them toward a profitable, efficient operation tend to get in the way of developing the innovations that can actually transform the business.”

– Maxwell Wessell, General Manager of SAP.io and Management Lecturer at the Stanford Graduate School of Business

This is one of the pivotal reasons many once-thriving companies fold, and even entire industries collapse. How can a company avoid becoming the next Blockbuster, Xerox, or Blackberry?

Companies that understand and embrace design – not only as a cosmetic or visual differentiator, but as a mindset and strategic approach to business – will ensure they create value for customers and shareholders even as competition and technology rapidly shifts.

Start-ups clearly embrace this notion: 87% of them believe design is important to their business; 85% of them have C-level executives weigh in on design decisions; and 31% of them are even founded by designers.  Start-ups are embracing design to create new value, and disrupt markets, but startups are not the only organizations leveraging design for business value.

Well-established companies are also making bold moves to embrace design as a mindset and strategy to evolve and re-think long-held assumptions – and ultimately protect their leadership positions.

Making Bold (Design) Moves

“Half measures are death for big companies, because people can smell lack of commitment. When you undertake a transformation…you’ve got to be all in. You’ve got to be willing to plop down money and people.”

– Jeff Immelt, former chairman, General Electric

Huawei: an innovative organizational structure

Huawei is a 200-year old Chinese manufacturer best known for selling antennas and base stations. However, since 2016, the company has been innovating toward its goal to overtake Apple and Samsung and become the globe’s number one smartphone maker within the next 5 years – and recently announced its ambitions to become a major global player in cloud services. How will they do it? Huawei is employing an iterative organizational structure where three different executives rotate through the company as CEO each year to empower this level of growth. This iterative approach to management is consistent with a fundamental principle of design, most commonly seen in product development. In iterative design a prototype is rapidly created, often in lower fidelity, to learn what’s working, and then iterated again in pursuit of continual learning and improvement. Different strategies are explored with each iteration, and the promise of future iterations makes each cycle less precious and therefore more open to change. Huawei’s iterative structure captures these same benefits, but at the organizational level – enabling the company to regularly learn and evolve the direction of the whole company. The promise of future leadership change makes the company more nimble, and more able to respond to opportunity.

Cisco: aggressive investment in new ventures and technology

This tech giant unveiled a 5-pillar innovation strategy a few years ago to ensure design was at the center of their organization. The pillars are focused on Build, Buy, Partner, Invest and Co-Develop to prioritize their company offerings. While this is a basic framework – the more interesting aspect of it is the staggering numbers related to strategic business investment: a $2B portfolio of investments; 100+ global startup investments; an acquisition rate that would make most corporate lawyers shudder; 180+ company acquisitions and an intense focus on patent development with over 19,000 patents pending – 7,000 of them in software innovation. While the numbers are impressive, the design principles Cisco has employed in activating their 5-pillar strategy focus on disruption and taking smart risks. These two principles are critical for tackling the right design challenges, and while potentially more risky – they have proven pay-off for business model disruption.

Your Path Forward: Creating a Company That Embraces Design as a Business Value

I applaud Huawei and Cisco for their bold actions, and the strategic risks they are taking to achieve business value through design, but I’m not inferring that these examples are right or possible for every company. However, there are some very foundational and practical ways to ensure your company is on the right path to embrace design as a business value. In other words – design as a strategic business value and differentiator has more than arrived…but how do you put it into practice? 

For the leaders at IA Collaborative, these foundational steps are ones we find ourselves guiding our clients through time and time again to put these values into practice:

1. Knowing What “Good Design” Looks Like – And Executing It.

I’ve had numerous conversations with executives at Fortune 100 companies around the basic principles of design. Many times, the first portion of the discussion starts with the question – “what does good design look like?” or point-blank admitting, “we don’t know what good design looks like.” I applaud these executives for their candor, because what they are really acknowledging is an understanding that design is not only an outcome, but a mindset – which is a huge, first step in the right direction towards embracing design for business value.

First let’s address the design outcome perspective. A fundamental challenge related to design deliverables is that a company without designers or design leadership is still forced to make design decisions – and therefore, most likely, they are not making the right design decisions for what that company truly needs. A common scenario I’ve seen in larger organizations is that a conglomerate of agencies is actually making independent design decisions – based on narrow channel vision, subjective “gut” feeling, and an internal team accepting whatever that agency says is a best practice at that time without having the appropriate background and skillsets to make an informed decision. There are no checks and balances. No guiding voice, and thus, a lack of solidly delivered design.

From the mindset perspective, designers approach designing a solution in systemic, iterative and disruptive ways.  The famous Steve Jobs quote embodies this perfectly: “Most people make the mistake of thinking design is what it looks like. People think it’s this veneer – that the designers are handed this box and told, ‘Make it look good!’ That’s not what we think design is. It’s not just what it looks like and feels like. Design is how it works.”

To create good design, you need to have team members whose job it is to ensure a system of companywide design alignment, checks and balances. You must have a design management structure in place that either sits on the executive leadership team or reports in to it; some type of organization-wide structure related to design decision making, influence, and investment. In 2015, 9 of the top 25 venture-backed startups had designers at the helm (1). Having designers in leadership positions can be one of the largest indicators to ensuring you are executing “good design.”

But where do you go if you’re currently “all in” on the production design / agency model and don’t have employees understanding and embracing a design mindset? You start at the foundation.

We’ve worked with global leaders to dive deep into their current design ecosystems – at various levels of conceptual and design scale – to uncover where their design maturity lies and uncover their potential to execute “good design.” One framework that does a great job breaking down the elements of design decisioning is from “Org Design for Design Orgs; Building and Managing In-House Design Teams” by Peter Merholz and Kristin Skinner. The framework considers design on many scales – from the broadest 10,000-foot level of a company’s structure, down to the 10-foot view of the designed artifact; things like interfaces, layouts and material finishes.

In considering this framework, we’ve helped companies assess their needs at each of these “feet levels.” This has resulted in everything from redefining a company’s structure to creating a new digital design language to leverage across an ecosystem of a company’s digital offerings.

Take the steps now to help your company consider design as not only an output but a mindset, and understand what good design is and what it looks like for your company.

2. Integrating Customer Insight into Everything You Do.

According to a global study of 1,500 CEOs, chief executives prioritize gaining customer insight far above other decision-related tasks and rank ‘customer obsession’ as the most critical leadership trait (2). At IA Collaborative, we always counsel our clients that customer insight isn’t a phase, a point in time, or a check box – it’s something you do at all times in a project and becomes engrained in your company’s DNA to make the most effective design decisions.

But let me clarify what type of customer insight are we recommending. While there are thousands of methods to gain customer insight, the ones to prioritize as part of your innovation efforts are those that are more exploratory in nature – e.g., personal immersions, ethnography, observational studies and contextual interviews. While more evaluative research methods like surveys, focus groups and usability tests are helpful and have their place in making incremental improvements to an offering, exploratory methods are the ones that lead to breakthrough innovation.

It’s one thing to pay lip service to this notion; it’s another thing to actually prioritize these approaches in your process. It’s pretty common to hear, prior to a project kick-off with a new client – “We already have customer insights to leverage.”  Only to find out that the insights were derived from usability testing or a quantitative survey. Let’s have a moment of honesty here:  how many times have you taken a survey and lied? From the doctor’s office (“I always take my vitamins and exercise 5 times a week!”) to a survey about your home energy habits (“I always turn all the lights off when I leave the house!”) – the reality is more likely that you hit the gym once a week if you’re lucky, and your house is lit up like a Christmas tree because your energy costs are too low to hit you where it hurts.

If a healthcare company took the doctor’s office data at face value, they would think none of their potential customers have bad health habits. By the same token, the home energy company would assume that everyone attempts to be a responsible steward of natural resources. In taking these answers at face value, they’ve missed a valuable opportunity to observe the space between what people say they do, and what they actually do. Spoiler alert – it’s usually different. That’s where the best ethnographers and designers employ observation-based research to understand the real truth around customer needs in order to design the right offerings. Offerings that make a customer say, “I didn’t even know I needed this, but now I can’t live without it.”  And this type of research should not just be employed during an upfront Discovery phase – it’s iterative throughout.

Customer insight should be continually leveraged to deliver the “good design” that every consumer has come to expect – regardless of your company type or offering.

3. Creating an Environment Where Design Can Thrive.

Look around you in your work environment right now. Are you in a space that inspires you to design, to create, to build, to make? Do you have a diverse group of people at your fingertips to bounce ideas off of and collaborate with? Do you have the tools to sketch and draw? Many companies de-emphasize the importance of spatial and environmental design in their efforts to become design-led; and yet, user experience for their employees is just as important as the user experiences they’re designing for! A thoughtfully and strategically designed space leads to better collaboration and better output, not to mention a space every team member is proud to come into and work at every day.

This does NOT mean I’m advocating to immediately knock down all walls and spend millions of dollars on superfluous details like an extreme color variety of Post-Its, foosball tables, or pour-over coffee stations. I am advocating to take a careful look at the way your employees actually need to work to execute good design.

The authors of Ethonomics: Designing For The Principles Of The Modern Workplace believe the workplace is ripe for reinvention. They say we can get there by using a different approach to design, “to explore new ways to create healthy, inspiring, and sustainable places in which people can feel good about where they are and what they do.”

Three years ago we had the opportunity to do just that – create our own office space to be a place where employees and clients alike would feel inspired to collaborate in and do great work as a result.  We turned the “customer insight gathering” on ourselves to define guiding principles for our own space, including considerations for the right areas of collaboration space; be it heads-down work, team work in project rooms or opportunities for serendipitous moments to connect and build; or the need for natural light and long views to directly impact team member’s health and wellbeing. This user-centric design approach to our space named IA Collaborative one of the 7 Most Exciting Workspaces in the World by Curbed in 2016, and we continue to iterate and evolve what the space can do to impact our team and work.

One great aspect of environment and work design – is that prototyping in this arena can cost almost nothing and be iterated on very quickly. Start by observing team member behaviors; see their challenges and barriers firsthand. If the water cooler is the only place for serendipitous interactions that inspire cross discipline collaboration – create more of those spaces. If employees need a mix of “heads down” focus time and active collaboration time; create space for both. If you have beautiful chairs and couches but nobody is actually sitting in them, find out why. Immerse yourself in the experience of your employees and you will be inspired to make more than a few changes.

Make Designing for Business Value a Reality

I’ve provided three actionable ways to start considering your company’s path to creating a design culture for business impact – and admittedly, there are many more interconnected and important steps to take to truly allow design to take root and flourish in our organization. However, I hope this has inspired you to make even one change and stretch the way you consider design in your company. We believe that it only takes one person to start the change, one action to get your team talking, one customer visit or even one day of working differently to be energized to help your company create tangible goals. Starting with any one of these steps – on a small or grand scale, will unlock business value that is just waiting to be discovered.

(1) “Design in Tech Report.” KCPB. 2016. http://www.kpcb.com/blog/design-in-tech-report-2016

(2) “Capitalizing on Complexity: Insights from the Global Chief Executive Officer Study.” IBM. 2014. https://www-01.ibm.com/common/ssi/cgi-bin/ssialias?htmlfid=GBE03297USEN